Correlation Between Chongqing Machinery and TOREX SEMICONDUCTOR
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and TOREX SEMICONDUCTOR at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Chongqing Machinery and TOREX SEMICONDUCTOR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chongqing Machinery Electric and TOREX SEMICONDUCTOR LTD, you can compare the effects of market volatilities on Chongqing Machinery and TOREX SEMICONDUCTOR and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Chongqing Machinery with a short position of TOREX SEMICONDUCTOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and TOREX SEMICONDUCTOR.
Diversification Opportunities for Chongqing Machinery and TOREX SEMICONDUCTOR
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chongqing and TOREX is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and TOREX SEMICONDUCTOR LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOREX SEMICONDUCTOR LTD and Chongqing Machinery is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Chongqing Machinery Electric are associated (or correlated) with TOREX SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOREX SEMICONDUCTOR LTD has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and TOREX SEMICONDUCTOR go up and down completely randomly.
Pair Corralation between Chongqing Machinery and TOREX SEMICONDUCTOR
Assuming the 90 days horizon Chongqing Machinery Electric is expected to under-perform the TOREX SEMICONDUCTOR. In addition to that, Chongqing Machinery is 2.76 times more volatile than TOREX SEMICONDUCTOR LTD. It trades about -0.03 of its total potential returns per unit of risk. TOREX SEMICONDUCTOR LTD is currently generating about 0.07 per unit of volatility. If you would invest 700.00 in TOREX SEMICONDUCTOR LTD on October 23, 2024 and sell it today you would earn a total of 20.00 from holding TOREX SEMICONDUCTOR LTD or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. TOREX SEMICONDUCTOR LTD
Performance |
| Timeline |
| Chongqing Machinery |
| TOREX SEMICONDUCTOR LTD |
Chongqing Machinery and TOREX SEMICONDUCTOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and TOREX SEMICONDUCTOR
The main advantage of trading using opposite Chongqing Machinery and TOREX SEMICONDUCTOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, TOREX SEMICONDUCTOR can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in TOREX SEMICONDUCTOR will offset losses from the drop in TOREX SEMICONDUCTOR's long position.| Chongqing Machinery vs. FAST RETAIL ADR | Chongqing Machinery vs. Indutrade AB | Chongqing Machinery vs. SUN LIFE FINANCIAL | Chongqing Machinery vs. Salesforce |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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